MORESCO Corporation
MORESCO Group delivers sustainable one-of-a-kind products

The 65th 2Q Financial Report（ From March 1, 2022 to August 31, 2022 ）Tokyo Stock Exchange Prime Market 5018 (Petroleum and Coal Products)
October 2022

Copyright © MORESCO Corporation All Rights Reserved.

Business environment for the current period (1)Dubai crude oil price$/b

Exchange rate¥/$120130

110
100

12090

110

80

10070
60

90

5080

4070

30

19-2Q

20-2Q

21-2Q

22-2Q
Naphtha Price in Japan

Thousand yen/kL

8060402019-2Q

20-2Q

21-2Q

22-2Q

Copyright © MORESCO Corporation All Rights Reserved.

1Business environment for the current period (2)Car Production by Our Operating Region

Source: MarkLines Co., Ltd.

10,000 units

3,000

24.9
million units

25.03
million units

359

420

473

502

1,257

1,211

333

401

371

20/2Q

21/2Q

22/2Q

2,500
2,000

215
1,500

348

1,000

1,009
500
0Notes:① Japan is from March to August, and overseas is from January to June.
② Southeast / South Asia aggregates Thailand, Indonesia, and India.
(Location of our manufacturing and sales base)

Southeast/South Asia

U.S.

ChinaJapan

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2

Consolidated Income Statement➢ Although sales increased due to product sales price corrections, the profit
margin declined due to further increases in raw material prices.
Millions of yen

Account title

21/2Q

22/2Q

Year-on-year change

Net Sales

13,366

14,523+8.7％

Gross Profit

4,544

4,039

△11.1％

Selling, General and
Administrative Expenses

3,621

3,744

+3.4％

Operating Income923

295△68.0％

Non-operating profit & loss

240

550

+129.4％

1,163846△27.3%

Extraordinary profit & loss

833－－

Income before Income Tax

1,996846△57.6%

Net Income *1,359504△62.9%

Ordinary Income* Net income attributable to owners of parent. The same applies hereafter.

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Breakdown of Sales by Division
Millions of yen

Account title

21/2Q

22/2Q

Year-on-year change

Functional Fluids

6,341

7,027

+10.8％

Synthetic Lubricants

1,033991

△4.1％

351

392

+11.4％

Liquid Paraffin & Sulfonates

1,672

1,855

+11.0％Hot Melt Adhesive

3,325

3,754+12.9％

987896△9.2％

Chemical Products TTL

13,358+8.7％

Rental Building Business

814,523－

13,366

14,523+8.7％(HD Surface Lub)

OtherTotal Net Sales－Copyright © MORESCO Corporation All Rights Reserved.

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Division Performance - Functional Fluids➢ Sales increased by 10.8% year-on-year (7,027 million yen)
Sales volume decreased by 0.7％

21/2Q

Millions of yen

2,014

2,000

22/2Q
2,090

➢ Unit prices rose due to sales pricecorrections.
1,751

1,800

1,600

1,512

1,391
1,231

1,400
1,200
1,000

880
778

800600429➢ In terms of volume, the decline in die
casting fluids will be covered by therecovery in demand for high-vacuum
pump oil and new sales expansion ofcutting fluids.

529
377 385

4002000Vacuum Hidraulicpomp oil
fluid

Diecasting
fluid

Cutting Forging Others
fluidlubricants
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Division Performance - Synthetic Lubricants➢ Sales decreased by 4.1% year-on-year (991 million yen)

Millions of yen

21/2Q

22/2Q

657600➢ High temperature lubricating oils
Sales decreased due to a decreasein automobile production volume.

575➢ Hard disc surface lubricants
Sales increased due to the impactof yen depreciation.

392400351200

240High temperaturelubricating oils

Hard disc surface
lubricants

25Others

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Division Performance - Hot Melt Adhesive➢ Sales increased by 12.9% year-on-year (3,754 million yen)
Sales volume increased by 8.9％

21/2Q

Millions of yen

22/2Q

2,688
2,500

➢ Unit prices rose due to sales pricecorrections.

2,312➢ Products for hygiene increased in India,Japan, and Indonesia.

2,000

1,500

1,000

417500446596639➢ Decrease in sales volume of automotive
products was offset by increased sales ofproducts for hygiene and products foradhesive materials.

0Hygiene

Adhesive

OthersCopyright © MORESCO Corporation All Rights Reserved.

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Division Performance - Liquid Paraffin & Sulfonate➢ Sales increased by 11.0% year-on-year (1,855 million yen)
Sales volume increased by 0.2％

Millions of yen
1,500

21/2Q

22/2Q
➢ Shipments of liquid paraffin used forpolystyrene plasticizer were strong. Whiledomestic shipments increased, exports
decreased.

1,389
1,2351,000➢ Unit prices rose due to sales pricecorrections.
500

3293571081090
Liquid paraffin

Sulfonates

OthersCopyright © MORESCO Corporation All Rights Reserved.

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Overseas Sales (Consolidated)％

Millions of yen

38.5
6,000

34.9

5,000

39.7

40

825
658
474
506

4,000
536
3,000

304
696

2,000

1,082

976

1,381

20

1,150

1,858
1,000

1,103

1,977

1,345

0

0
20/2Q

21/2Q

22/2Q

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Consolidated Income Statement
Millions of yen

Account title

21/2Q

22/2Q

Year-on-year change

Net Sales

13,366

14,523+8.7％

Gross Profit4,544

4,039△11.1％

Selling, General and
Administrative Expenses

3,621

3,744+3.4％

Operating Income

923

295

△68.0％

Non-operating profit & loss

240550+129.4％

1,163846△27.3%

Extraordinary profit & loss

833－－

Income before Income Tax

1,996846△57.6%Net Income *1,359504△62.9%

Ordinary Income* Net income attributable to owners of parent. The same applies hereafter.
Copyright © MORESCO Corporation All Rights Reserved.

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Consolidated Income Statement
Millions of yen

Account title

21/2Q

22/2Q

Year-on-year change

Net Sales

13,366

14,523+8.7％

Gross Profit

4,544

4,039

△11.1％

Selling, General and
Administrative Expenses

3,621

3,744

+3.4％

Operating Income

923295△68.0％

Non-operating profit & loss

240

550

+129.4％

1,163846△27.3%

Extraordinary profit & loss

833

－－

Income before Income Tax

1,996846△57.6%Net Income *1,359504△62.9%

Ordinary Income* Net income attributable to owners of parent.
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11Selling, General and Administrative Expenses
Millions of yen

Selling, General and
Administrative Expenses(include R&D Expenses)

R&D Expenses

SGA Ratio

Ratio of R&D Expenses toSales

Increase/Decrease

Year-on-yearchange

21/2Q

22/2Q

3,621

3,744+122+3.4%

684635△49△7.1%

27.1%

25.8%

5.1%

4.4%
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Consolidated Income Statement
Millions of yen

Account title

21/2Q

22/2Q

Year-on-year change

Net Sales

13,366

14,523+8.7％

Gross Profit

4,544

4,039

△11.1％

Selling, General and
Administrative Expenses

3,621

3,744+3.4％

Operating Income

923295△68.0％

Non-operating profit & loss

240

550+129.4％

1,163846△27.3%

Extraordinary profit & loss

833－－

Income before Income Tax

1,996846△57.6%Net Income *1,359504△62.9%

Ordinary Income* Net income attributable to owners of parent.
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13

Profit and Loss by Regional Segment (Consolidated)■Sales to external customers
Net SalesJapan

10,000558

Operating
Income Net Sales

8,029
△8143

Net Sales

21/2Q

1,000

1,677

84

Southeast/South Asia
632,205

2,726

20/2Q

Operating
Income Net Sales

100

21/2Q

20150

0022/2Q

Operating
Income10076300

4122/2Q

21/2Q

North America

60
40020/2Q

9504501,857
12200022/2Q

3,000

1,000

1,737

150
-50

2,0003001,189020/2Q

OperatingIncome

235

550
350

9,053

Millions of yen

China

2,000

9,624
5,000

■Operating Income

274
15432

436

75

3250
25020/2Q

21/2Q

22/2Q

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14

Balance Sheet (Consolidated)
Millions of yen
Account title

Increase/
Decrease

22/2Q

Account title

Increase/
Decrease

22/2Q

Cash & Deposit

4,166

165

Trade Payable

4,926

618

Notes and accounts
receivable

7,524

680

Interests bearing debt(Current)

1,927

1,018

Inventories

6,102776

Other Current Liabilities

1,612

△781

493

58910

63

Current Assets

18,285

1678

Total Liabilities

9,375

918

Property, Plant andEquipment

8,395

91

Capital Stock・Capital
Surplus4,095

1

Intangible Assets

649

16

Retained Earnings

13,834316

Investments and Others

3,764

298

Treasury Stock

△567

△183

12,808406

Accumulated Other
Comprehensive Income

1,583

849

Non-Controlling Interest

2,773

183

Total Net Assets

21,717

1,166

Total Liability & Assets

31,092

2,084

Other

Fixed Assets

Total Assets

31,092

2,084

Other Noncurrent Liabilities

Note: Increase/Decrease vs. End of FY2021
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15

Capital Investment/Depreciation
Millions of yen

Account title

21/2Q

22/2Q

Increase/Decrease

Total Capital
Investment

334

284

△50MORESCO

176

128

△48

Consolidated
Subsidiary

158

156

△2Depreciation

590

612

+22

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16

Interest-bearing Debt
Millions of yen

Account title

End of February2022

End of August2022

Increase/Decrease

Short-term
Borrowings *560

1,546+986

Long-term
Borrowings

350382+32

Total Borrowings

910

1,927+1,018

Interest-bearing
Debt Ratio

3.1%

6.2%

* Includes the current portion of long-term borrowings

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17Cash Flow (Consolidated)
Millions of yen

Income before
Income Tax 846

Operation

Investment

535

△718

Currency
Exchange
Adjustment△77
Finance

487
3,869
Cash
Equivalent

Beginning of FY

4,096
Acquisition of property,
plant and equipment△744

Borrowings
1,031
Acquisition of treasury stock △194
Dividend Payout
△298

Cash
Equivalent

End of 2Q
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18

Financial Summary Management index

Earning Per Share

Capital Ratio
Ordinary Profit Ratio

Reference:
Number of shares (year-end)Reference:
Number of shareholders at the endof the period

20/2Q

21/2Q

22/2Q

△9.35yen

144.92yen

53.94yen

57.9%

63.6%

60.9%

0.5%

8.7%

5.8%

9,697,000

9,697,000

9,697,000

16,416

16,003

15,176

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19

Consolidated Earnings Forecast
Millions of yen

2022/2Q
Account title

ActualYear-on-yearchangeFY2022 full year
Forecast

Progress rateYear-on-yearchangeNet Sales

14,523+8.7%

31,500+3.3%+15.4%

Operating
Income

295

△68%

1,110

△40%

△23%

Ordinary
Income846

△27%

1,700

△23%

△16%

Net Income

504

△63%

1,000

△23%

△45%

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20

Realization of a
Sustainable Society

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21

Development and sales of eco-friendly products

Conventional product

Minimum quantity spray type

Water-soluble
minimum quantity
spray type lubricant

Hot Melt Adhesives that contain plant-based resin

Developmentof eco-friendlyproducts

Biomasshotmelt

Water-glycol hydraulic fluid

Lubricantmade fromrecycledmaterials

Powder releasing agent
RecoveredpowderRecycling

Foreign matter removal
Components adjustment
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22

New product development for new energy vehicles*➢ Develop new products for lightweight materials in China, which isdriving the new energy vehicle market, for global expansion.

Sales volume forecast by area in 2022

Sales Volume Forecast from 2022 to 2035
35,959(Thousand units)

OthersJapanNorth
AmericaJapan
North Amerika

1％Europe

2％
China

16％

China

5,378

40％
10,553(Thousand units)

41％

21,749Others

5,378

6,507

7,672Europe
2022(Forecast)

2023(Forecast)

2024(Forecast)

2025(Forecast)

2026(Forecast)

2027(Forecast)

Source: In-house preparation based on "Worldwide Market Long-Term Outlook (2021)" by Fuji Keizai Co., Ltd.
*The Chinese government classifies electric vehicles (EVs), plug-in hybrid vehicles (PHVs), and fuel cell vehicles (FCVs) as new energy vehicles.
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23

OPV - Contributing to Solar Power Generation in Urban Areas➢ OPVs reduce payback time* to 1/3 that of Si
solar cells, contributing to a reduction inenvironmental impact.
*Payback period for CO2 generated from materials to production

CO2 payback time (in months)
42

Monocrystalline Si solar cell
OPV (5% power generation efficiency)➢ Working with universities to develop materials OPV (7% power generation efficiency)
to improve power generation efficiency.
OPV (10% power generation efficiency)

13
9

Reduction ofapproximately
29 months

6

Increase solar power generation in urban high-rise buildings when used in conjunction with Si solar cells.
Si solar cells

Building Low-rise:
OPV (print)
Example of use: electronic paper

Building Middle Level:
OPV (see-through)Example of use:
Auxiliary power supply for monitors
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Radiation Resistant Lubricating support safety in extreme environments

It is used in the high radiation
area of ​one of the world's
leading accelerators.

It is used in thedecommissioning process atthe Fukushima Daiichi
Nuclear Power Station.

It supports the safe operationof advanced medical care.

CERN: The world's longest
accelerator with a total length of 28
km straddles the border between
Europe/Switzerland and France

It is used in the moving parts ofrobots that retrieve fuel debris underhigh dose conditions.

Radiation/quantum beam medical
internal movable equipment set

ESS: Europe/Sweden The world's
most powerful beam accelerator

The 6th International Forum on theDecommissioning of the Fukushima
Daiichi Nuclear Power Station

A set of movable equipment inside amanufacturing facility for medical
radioisotopes

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25

R&D system for solving social issues
Conventional: A development system for each business division that can quickly respond to the needsof each market＋
Newly established: A development meeting that crosses business divisions and collaborates within thecompany and with industry, government, and academia
Theme

In-house production of nonpetroleum-derived raw materials

Division A

Theme

The Challenge of theHydrogen Business

Division B

R&D
Committee
Division C
Overseassubsidiary
Cooperatingcompanies/
universities

・Basic Problem
Solving・Common Problem
Solving

Theme

Survey of renewable energy
Theme

Creation ofnew
technologies
and new
fundamental
technologies

Reclamation of waste oil/
Application to lubricant basematerial

Theme

Investigation and use ofbiomass raw materials

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26

Contribution to the realization of a hydrogen society
Current status:
Dissemination of gas & water vapor
transmittance measurement device“MORESCO-SuperDetect”
Performance
Number of samplechambers(Existing)(New)
Single chamber type Multi chamber type1 chamber

4 chambers～1×10-6～3×10-5

2 samples/4 days

4 samples/4 days

Result analysis

Advanced

Easy

Use

R&D

Application field

Organic device

Measurement
sensitivity
Measurement
efficiency（10-3 order）

ExistingFuture:
Aiming to become a platformer for thedevelopment of substances forhydrogen➢ We aim to standardize the industry bybuilding a database of measurement
results with calibration films that canderive accurate measurements witheach manufacturer's equipment.
Calibration film

Production process
Quality control process
Electronic parts,
electronic equipment,
food, pharmaceuticalpackaging

New
Measuring device with calibration film set➢

Furthermore, we are developing a device specialized
for hydrogen permeability measurement.

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27

Generation of petroleum materials from biomass resources
Hydrogen (H2)Animal waste

Liquid fertilizer

Raw garbageSewage sludge,
waste foodstuffs, etc.

Dehydration reaction& hightemperature/pressure
reaction

MethaneOxidation
reaction

CO₂✅ Lubricant✅ Polymer raw
materials
Hydrocarbon(-CH２-)ｎMethanol, etc.
Reuse for biogas plant

MethaneByproduct

Powergeneration

Excess heat

BiogasBiogas plants(≒ Fermentation tank)

Water (H2O)

Electricity Sales or Synthetic Energy
Heat of fermentation
Bedding(Bedding straw for livestock)
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28

Initiatives for decarbonization➢ By 2030, we aim to reduce GHG emissions by 46%from our own energy consumption (compared to 2013) .
➢ We aim to be carbon neutral by 2050, including our supply chain.
➢ We are working on setting our GHG emissions Scope 3 targets to bereleased by the end of this quarter.

*July 2022 Publication

GHG emissions of the MORESCO Group (Japan)
Unit: t-CO2

10,6022020 vs. 2013

8,053
5,725
(▲46％)

Scope 1

Scope 2
Total emissions

2013

2017

2018

Scope1 Direct emissions

2019

2020

▲28％
▲14％
▲24％

2030

Scope2 Indirect emissions
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29

Initiatives for health management
Health Management Excellent Corporation 2022
(Large-scale Corporate Division)

Certified for two consecutive years*This is a system that recognizes corporations that are practicing particularly good health management.
（Ministry of Economy, Trade and Industry）

MORESCO Health Management Declaration
MORESCO believes that physical and mental

health of employees is essential to the sustainable
development of the company. In order to makeHealth Management Promotion System
Health Management Officer（President and Representative Director）

Director of Human Resources

Industrial Physicians

Human Resources
Department

Health Insurance
Associations“a company where everyone can grow in arich environment and cultivate new value”
a reality, we are promoting the development ofemployee health.

Public Relations Department

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30

Head Office/R&D Center

Kobe City

Kobe Airport

Forecasts, strategic goals and other forward-looking information in this presentation are based on
the judgements of MORESCO at the time this presentation was prepared. This information may
be revised without prior notice.
Investors are cautioned not to rely entirely on the forecasts and goals in this presentation when
making investment decisions. MORESCO assumes no responsibility for any resulting losses.
This presentation may not be copied or reused in any other way without the prior consent ofMORESCO.

MORESCO Corporation

https://www.moresco.co.jp/Copyright © MORESCO Corporation All Rights Reserved.

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